Identifier
Created
Classification
Origin
06NEWDELHI8280
2006-12-11 13:17:00
CONFIDENTIAL
Embassy New Delhi
Cable title:  

U.S.-INDIA BILATERAL DIALOGUE: BURNS AND MENON

Tags:  PREL PGOV PTER ETRD EFIN ECON EINV KIPR MARR 
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C O N F I D E N T I A L SECTION 01 OF 10 NEW DELHI 008280 

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SIPDIS

E.O. 12958: DECL: 12/07/2021
TAGS: PREL PGOV PTER ETRD EFIN ECON EINV KIPR MARR
EAGR, KDEM, KSCI, SENV, IN
SUBJECT: U.S.-INDIA BILATERAL DIALOGUE: BURNS AND MENON
DISCUSS PRESIDENTIAL INITIATIVES AND A ROADMAP FOR THE
FUTURE

Classified By: Charge d'Affaires Geoffrey Pyatt for Reasons 1.4 (B, D)

C O N F I D E N T I A L SECTION 01 OF 10 NEW DELHI 008280

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/07/2021
TAGS: PREL PGOV PTER ETRD EFIN ECON EINV KIPR MARR
EAGR, KDEM, KSCI, SENV, IN
SUBJECT: U.S.-INDIA BILATERAL DIALOGUE: BURNS AND MENON
DISCUSS PRESIDENTIAL INITIATIVES AND A ROADMAP FOR THE
FUTURE

Classified By: Charge d'Affaires Geoffrey Pyatt for Reasons 1.4 (B, D)


1. (C) Summary. During the December 7 U.S.-India Bilateral
Dialogue, chaired by Undersecretary Burns and Foreign
Secretary Shiv Shankar Menon, the two sides followed up on

SIPDIS
the list of Presidential initiatives agreed upon in July 2005
and March 2006 by President Bush and PM Singh, as well as
ideas for accelerating the transformation which is occurring
in the relationship, including:

-- a desire for even greater senior-level engagement;
-- the successful CEO Forum;
-- the expected successful completion of the civil-nuclear
cooperation initiative legislation;
-- the Trade Policy Forum;
-- the Agriculture Knowledge Initiative;
-- Avian Flu and climate change;
-- Energy Dialogue;
-- science and technology;
-- intellectual property rights;
-- civil space cooperation;
-- defense cooperation and maritime security;
-- counterterrorism;
-- promoting democracy; and
-- the Fulbright scholars program.

End Summary.

Charting a Roadmap for the Future
--------------


2. (C) Menon opened the meeting by thanking Burns for his
role in transforming the U.S.-India relationship, noting that
his timing in coming to India was "perfect, as usual." He
suggested that the focus of the meeting be to chart a roadmap
for the future, and the two sides should begin by reviewing
what has been done and is left to do under the July 18 Joint
Statement. Burns said that he would travel to Hyderabad at

the end of the week to see the site for the new U.S.
Consulate. Before getting to the specific agenda, he wanted
to make some general points: The U.S. is pleased by the
growth in the bilateral relationship and would like to deepen
it through even greater senior-level engagement. Secretary
Rice wants to visit India early in 2007; the U.S. would
welcome India's ideas on timing and dates. The civil nuclear
agreement serves as a symbol of the growing relationship, and
bilateral engagement will deepen through military-to-military
relations, economic cooperation, and implementation of the
civil nuclear agreement.


NEW DELHI 00008280 002 OF 010



3. (C) Burns said that the U.S. hoped for a series of
reciprocal visits in 2007 that would propel the relationship
forward, including visits to the U.S. by Foreign Minister
Mukherjee and Foreign Secretary Menon. He noted that it is a
rare event to witness firsthand a momentous development in
any bilateral relationship, but that will happen on December
7 and 8 as the U.S. Congress issues the final Conference
Report. He said he expects a strong bill, well within the
parameters of the July 18, 2005 agreement and the March 2,
2006 separation plan. Burns said that the mood in Washington
is very positive toward India. This is reflected in both the
Administration and Congress, where incoming SFRC Chairman
Biden and HIRC Chairman Lantos in the new Democratic Congress
have voiced strong support for strengthening the bilateral
relationship. Burns noted that, according to polls, India is
now the fifth most popular country among Americans, and wants
to use that momentum to look over the horizon to further the
relationship.


4. (C) Menon agreed with Burns that the two sides should look
to take the relationship to a much higher level. The civil
nuclear agreement had evoked gratitude and admiration toward
the U.S. from both the government and public. He agreed that
U.S. bipartisan support was critical and the goal by the end
of the day should be to get a sense of where to take the
relationship over the next few years. Menon also agreed with
the concept of high level exchanges in 2007 and accepted
Burns' invitation to visit.

A Successful CEO Forum
--------------


5. (C) Turning to the agenda, on the CEO Forum, Menon cited
four areas to explore for further action: follow up on the
very successful CEO Forum in October in New York, including
possible expansion of CEO membership, move forward on
establishing an infrastructure fund with the GOI contributing
10 to 15 percent of the $5 billion needed to jump start the
process, U.S. company participation in India,s planned
mega-power generation projects beginning with a U.S.
Department of Energy-sponsored conference, and achieve
progress on U.S. approval for pending applications by Indian
banks to open branches in the U.S. Burns replied that he had
been in China and unable to attend the CEO Forum but received
very positive feedback on the New York meeting. Burns said
that, unlike many CEO Forums, including one he had been
involved with, the U.S.-India CEO Forum was working.
Ambassador Mulford said the CEO Forum worked because it was
created by the CEOs who set the agenda and invite government
officials who, Menon noted, were responsive to the CEOs'

NEW DELHI 00008280 003 OF 010


needs. The CEOs establish connections and value the personal
contact, and the Forum will continue for as long as the CEOs
feel it is useful and can be a venue for frank and open
off-the-record discussions on the issues. The Ambassador
noted that Secretary Paulson decided to attend the October
meeting because he viewed it as useful and important -- a
real business meeting. With respect to expanding the Forum
from its current ten members on each side, the Ambassador
recommended, and Menon agreed, that CEO Co-Chairmen Tata and
Harrison discuss the matter and tell governments what they
intend to do.

Trade Policy Forum
--------------


6. (C) Menon next turned to a review of the Trade Policy
Forum (TPF),noting that Deputy USTR Bhatia had just visited
India and progress had been made in all five Focus Groups
under the TPF. On IPR, retail, and FDI issues, Menon noted
that there was some room to move on issues within the
existing laws without having to take new legislation to the
Parliament. Menon said the GOI hoped that the U.S. and India
could reach agreement on a Totalization Agreement similar to
what India negotiated with Belgium to recapture social
security payments made by Indians working in the U.S. who
then return to India. He noted that India still owes the
U.S. responses and data on IPR areas like Traditional
Knowledge and pirated Indian music in the U.S. There had
been progress as well on legal services, where the two sides
were close to identifying a panel of lawyers for discussion.
He asked Burns how the U.S. sees the TPF progressing.


7. (C) Burns noted that trade had dominated discussions
between President Bush and PM Singh on the margins of the St.
Petersburg G-8 summit, underscoring its importance in any
bilateral relationship. Burns said the number one U.S.-India
trade priority should be working together to achieve a
breakthrough on the Doha Round. Burns said more high level
engagement is needed, and he hoped USTR Schwab and Commerce
Minister Nath could meet, perhaps in Europe. Burns noted
that the recent visits of Secretary of Agriculture Johanns
and Under Secretary of Commerce Lavin, who led the largest
U.S. trade mission ever, underscored how well the bilateral
trade relationship is going and we need to do the same for
Doha. Menon agreed with the need for cooperation on Doha,
but noted the complexities of engagement on Doha is not just
bilateral but multifaceted ) G-20, G-33, U.S.-EU, etc.
Menon said the current impasse will only be resolved at the
highest levels and stressed that Prime Minister Singh is
interested in a successful Doha Round. India, he assessed,

NEW DELHI 00008280 004 OF 010


has the same interest as the U.S. in rules-based, open trade.
Menon said the recent U.S. Trade Mission had made a huge
impression and the GOI was looking forward to hosting a
U.S.-India Investment Summit in 2007.

Agriculture Knowledge Initiative (AKI)
--------------


8. (C) On agriculture, Menon said that Johanns' visit
coincided with the fourth meeting of the AKI Board, and India
is committed to the three year work plan, including
incorporating commercial activities. Burns said that the AKI
was born out of the two leaders, July 18 meeting where PM
Singh talked about a second green revolution. It was
critical that we show progress on AKI at the next meeting
between the two leaders in 2007. Burns said that the U.S.
will do its part on AKI and our numerous high level visits
have been intended to show our commitment to make progress
across the broad range of issues. Burns said that there will
be a U.S. interagency review of progress within one month.



9. (C) The Ambassador said that we need a broader, stronger
intellectual engagement beyond immediate micro issues. He
noted that, while India is globalizing most sectors of the
economy, it has fenced off the agriculture and rural sector,
which limits India,s capacity to be a global agricultural
power. We need a roadmap that keeps the big macro issues in
play and avoids getting bogged down in trade discussions on
micro, company-specific issues. Menon agreed, but noted that
issues involving the rural sector in India, as in the U.S.,
are socially and politically sensitive, which presents unique
challenges. Agriculture lagged behind services and
manufacturing and the way out was clearly through application
of science and technology. But if India were to open the
sector before doing that it would have a problem. Menon
recognized that it was a difficult balancing act to address
these concerns within the context of Doha, but India will
work with the U.S., and AKI will be a key in bringing
technology to the rural sector. Menon said it was also
difficult to urge market opening when other countries and
markets imposed strict sanitary and phyto-sanitary (SPS)
measures. Burns expressed concern with the small Indian
financial commitment to AKI to date as compared to the U.S.
$8 million annual commitment; Menon explained the GOI was
working to deliver much greater financial resources per the
agreement.

Avian Flu/Climate Change
--------------

NEW DELHI 00008280 005 OF 010




10. (C) Burns identified Avian Flu (AF) and climate change
as two other increasingly important issues for the U.S., and
welcomed India hosting the 2007 AF Conference. He noted that
climate change is assuming greater importance with the
American public and political leaders, and said that strong
Indian participation in the Asia-Pacific Partnership (APP)
was welcome. He noted that India and China will be under
increasing pressure to reduce greenhouse gas emissions, which
was a strong selling point with Congress on the civil nuclear
agreement. Burns noted that Under Secretary Dobriansky is
deeply involved in the climate change issue and suggested
that it should be on the agenda when Secretary Rice and
Foreign Minister Mukherjee meet. Menon said that India
looked forward to hosting the 2007 AF Conference and said
India would be happy to host the next APP Ministerial. He
noted that India co-chairs two APP task forces on steel and
coal mining and was working to get greater Indian industry
involvement. Menon said climate change is now an important
issue in India as evidenced by the fact that there had just
been an inter-ministerial discussion on it on December 7.

Energy Dialogue
--------------


11. (C) Menon said that the Energy Dialogue Steering
Committee had not met since last February and, while the
working groups are doing well, it is time to review the long
work lists to prioritize and determine which ones will
provide the best added value. Burns agreed and said he was
seeing Minister of Petroleum Deora on Friday. Secretary of
Energy Bodman and Deora have had good meetings and we are
hoping for greater cooperation, including regional
cooperation on energy in Central Asia. Burns emphasized that
maintaining a High Level Strategic Dialogue on Energy was
important. Menon noted that India and Pakistan have
discussed energy cooperation and there is a regional
agreement on an energy grid.

Science and Technology
--------------


12. (C) The GOI was very happy with the recent visit to India
of National Science Foundation (NSF) Director Bement, Menon
declared. India would welcome the posting of an NSF officer
to New Delhi, adding that this could be a vehicle for
promoting scientific cooperation. Menon said he would like
scientific cooperation to have as wide an architecture as
possible, to encompass the public and private sectors and
build on existing bilateral programs. Ambassador Mulford

NEW DELHI 00008280 006 OF 010


stressed the need to create an entity which would include
public institutions but have a commercial orientation, citing
the concepts of AKI as an example.

Intellectual Property Rights
--------------


13. (C) Menon said India is about to sign a Memorandum of
Understanding with the U.S. Department of Commerce on
capacity building for enforcing intellectual property rights
(IPR). One concern India has, which it has raised before, he
emphasized, was its inclusion on the USTR priority watch
list. While not perfect, India has laws and enforcement
capabilities for IPR, and is working on capacity building,
while also taking action to accede to the Madrid Protocol.
He hoped India would be removed from the priority watch list
as soon as possible. Acting EconCouns explained that the
Embassy has asked USTR and other USG agencies to do a
comprehensive review of India's position on the list, adding
he hoped to have a reply within a couple weeks. Menon said
he recognized that there had been specific problems with
India's pharmaceutical industry, but because of that one
industry the whole of India is punished by being on the watch
list. He questioned whether U.S. information on India's IPR
enforcement was current, and requested U/S Burns to continue
to discuss the issue with the goal of getting India removed
from the list.

Civil Space Cooperation
--------------


14. (C) The issue of civil space cooperation attracts a lot
of attention, according to Menon, and is an area, like civil
nuclear cooperation, where bilateral trust can be
strengthened. While civil space cooperation began with
successful negotiation of a technology safeguards agreement,
its progress has been slowed by being associated with
subsequent agreements such as the Commercial Space Launch
Agreement (CSLA),Doha Round, and various other obstacles,
Menon said. The U.S. and India should seek opportunities for
immediate cooperation based on the technology safeguards
agreement, then CSLA and then move on to more complicated
forms of cooperation, not make them contingent on each other.
"The best is the enemy of the good" in this case, Menon
stated. U/S Burns said there needs to be more thought as to
how our two bureaucracies can find a way to move ahead,
noting there will be a High Tech Cooperation Group (HTCG)
meeting in February where this could be discussed further.
In regard to the HTCG meeting, Menon said he hoped the U.S.
and India would discuss India's position on the "white list,"

NEW DELHI 00008280 007 OF 010


explaining India was sensitive to being "lumped" into the
same category as China in terms of validated end users.
India deserves to be higher on the list than China, he
asserted, given its record of handling sensitive technology
appropriately and its system of export controls. India has
presented the U.S. with a non-paper on this issue, he said,
which he hoped could be discussed in depth in January to make
the February HTCG more productive. U/S Burns offered to get
more information on issues surrounding space cooperation from
relevant U.S. agencies and provide Menon with a response.

Defense Cooperation/Maritime Cooperation
--------------


15. (C) Calling defense cooperation one of the highest
potential growth areas for the relationship -- along with
counterterrorism -- U/S Burns referred to tsunami relief as
an example of how our militaries were able to collaborate in
real time on a large scale operation. The U.S. would like to
see more ambitious bilateral exercises and training in the
future, he stated, as well as increase equipment sales and
cooperation between our two militaries. Menon wholeheartedly
agreed, saying, "you'll be pushing an open door" when asking
for closer mil-mil ties. He offered that India was close to
signing the Logistics Support Agreement (LSA) and the
Communications Interoperability and Security Memorandum of
Agreement (CISMOA). Menon said he believed the U.S. now has
a level playing field when it comes to bidding on defense
contracts. One issue of concern he flagged was the issue of
end-use monitoring (EUM),although he said he believes the
GOI has a solution, provided both sides are willing to be
creative. Menon and U/S Burns agreed there would be an
opportunity to discuss defense cooperation in more detail
when U/S Burns meets with Defense Secretary Shekhar Dutt,
scheduled for December 8. Menon said he believed maritime
security also offered an opportunity for closer cooperation,
and hoped the subject could be discussed further prior to the
next Secretary-Foreign Minister meeting.


16. (C) U/S Burns said that, in his experience, as defense
relations between two countries grow, it brings with it a new
level of complexity. The real way to reinforce closer
defense ties is through technology transfer, he said,
pointing out that the U.S. and Indian militaries would not be
able to operate together without at least some of the same
systems. EUM is part of our relationship with even our
closest allies, such as the UK, Australia and Japan, and is
part of the price of having a closer relationship. Even with
close partners, requirements such as EUM can be
misunderstood, he said, and the more the politics surrounding

NEW DELHI 00008280 008 OF 010


such issues can be avoided, the better for the relationship.
Menon noted that low-level talks on Missile Defense between
the U.S. and India have been ongoing.


17. (C) Ambassador Mulford said the issues of co-production,
technology transfer and offsets, as well as India's capacity
to absorb offset investments, are very important given the
intense attention Indian defense procurements are attracting
from private industry. While the U.S. government does not
support offsets as a matter of policy, the Ambassador noted
American companies have a great deal of experience in offset
investments in other countries, some of whom have used
offsets as a development tool to support broader social and
economic growth. Menon said India's most recent Defense
Procurement Policy had loosened offset regulations somewhat,
that procurement policy is still evolving, and suggested
there would be considerable change in its implementation.

Counterterrorism
--------------


18. (C) Counterterrorism cooperation is an area where our
bilateral relationship could leap forward, U/S Burns told
Menon, perhaps taking on symbolic value similar to that of
the civ-nuke deal. Saying the U.S. still has more to learn
about Indian sensitivities toward Kashmiri and other
terrorists targeting India, U/S Burns suggested C/T as an
area for more ambitious cooperation and one which should be
further explored prior to the next Secretary-Foreign Minister
meeting. India and the U.S. need each other to better
address terrorism, both domestically and globally. S/CT
Deputy Coordinator Palmer provided a readout of her meeting
earlier in the day with Additional Secretary KC Singh, where
they discussed possible agenda items for the next
Counterterrorism Joint Working Group (CTJWG),expected in
February, including joint operations, intelligence sharing,
biometrics, enhanced exchange of tactical data, and exploring
the link between narcotics and terrorism. Menon said he
agreed entirely on the need to raise our cooperation,
specifically in the areas Palmer described but also in
terrorism financing. We could cooperate in a way both sides
would find comfortable, Menon said, explaining that they
could avoid the perception that, for example, India was using
the cooperation as a means to find information which could
embarrass the government of Pakistan. Building credibility
into our partnership would be the basis for more effectively
fighting terrorism, he said. U/S Burns said the U.S. side
would try to develop substantive ideas prior to the CTJWG.

Democracy Building

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--------------


19. (C) Menon and U/S Burns agreed that promoting democracy
was an area where our two great democracies could do more,
whether together or in parallel, and that the UN Democracy
Fund -- to which the U.S. and India were the first donors --
would be a good venue for cooperation. Menon cited his
meeting the previous week with U/S Dobriansky, saying that
while he and she seemed to come from two different
approaches, they had arrived at the same conclusion that the
U.S. and India share common goals on democracy promotion and
can do more together. Menon said that India has gained
confidence in promoting democracy through its recent
experiences in Nepal, Afghanistan and Bhutan, where it helped
the democratic process along without being prescriptive or
intrusive. He called democracy "one of the ties that bind
us." U/S Burns cited opportunities for democracy promotion
in Bangladesh, Nepal, Afghanistan and perhaps Kyrgyzstan as
potential areas for cooperation. Menon agreed on all but
Kyrgyzstan, saying he was not sure how much the government
there was willing or ready to discuss democracy, although he
said he would be willing to discuss Kyrgyzstan further.

Fulbright Scholarships
--------------


20. (C) The U.S. has become frustrated with the way India has
handled the Fulbright program recently, U/S Burns said, a
surprisingly disappointing development given the general
positive trends in the relationship. Massive delays in visa
issuance, lack of joint funding, and potentially
discriminatory screening of certain Fulbright research
proposals have detracted from a program designed to build
bridges. He urged Menon to look at India's participation in
the program and rebuild its foundations. Ambassador Mulford
stressed his concern that simply approving pending visa
applications would not solve the fundamental problems
involved, and suggested a mechanism be put in place quickly
-- before the next round of applications go out in April --
toward establishing a long-term solution. Menon said he had
heard about visa problems, but was surprised to hear the
depth of the problem. In general, he felt, governments
should not get in the way of scholarly exchanges. The GOI
had started an interagency process in the previous week to
address problems in the Fulbright program, and Menon said he
was told pending visa requests would be reviewed by a
committee which would meet monthly. He said he would look
into the issues of funding and censorship of certain
programs, and promised to respond to Burns after the next
monthly meeting.

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21. (U) Undersecretary Burns' party has cleared this cable.
PYATT